COVID-19: What does it mean for my existing Life Insurance Policy?

26 March 2020

It would be hard to turn on the TV without seeing updates on COVID-19. This is a quick moving topic and landscape that is proving to be difficult to plan ahead and keep up.

I have been receiving some important questions from clients regarding life insurance, which I thought I would address to help provide clarity.

Am I covered?

With existing retail policies, insurers have confirmed they will cover COVID-19. I have not come across any exclusions that would prevent a policy paying out for a claim related to COVID-19, as long as the policyholder has followed Government travel advice.

When can I claim?

As with all claims, you must have fulfilled your disclosure obligations and met the terms of your specific policy in order to be eligible for a benefit payment.

In addition to this, if you become unwell and this impacts your ability to work beyond the duration of your waiting period. This is subject to the terms and conditions of your specific policy.

Is there any reason why I can’t claim?

There are limited exceptions where there are exclusions in clients’ existing policies. These exclusions will be a part of your policy documents you received when taking out your policy.

I hold a group cover policy through my superfund. Am I covered?

Not necessarily.

I have come across instances of Pandemic Illness exclusions when reviewing group insurance policies through superannuation. In these instances, the insurer may have the power to invoke the following exclusions:

Death or terminal illness benefits will not be paid if:

  • The death or illness is directly or indirectly because of a pandemic illness; and
  • The death or terminal illness occurs within 30 days of the cover

a) commencing

b) recommencing; or

c) increasing.

The other thing to consider with group policies is they are not guaranteed renewable, so we may see some more of these exclusions crawl into more group policies.

Is it too late to get cover?

No, however there are specific questions starting to be added into the application process. There have been instances of some insurers looking at placing exclusions on new policies, however as I am writing this article I have not personally come across this.

Have more questions or concerns?

Now is a great time to reach out to a risk insurance adviser. If you don’t have one, now is the time to get one.

And with everything that is going on now, it’s a great opportunity to revisit your life insurance policies, understand what you are covered for, and give yourself and your family peace of mind in these difficult times.

Findex has developed a Government Stimulus Health Check and free Business Wellbeing Toolkit to help businesses manage potential risks and take full advantage of eligible stimulus assistance. Book your Health Check here.